Case No. VFA-0391, 27 DOE ¶ 80,125

April 10, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner: William H. Payne

Date of Filing: March 13, 1998

Case Number: VFA-0391

On March 13, 1998, the Office of Hearings and Appeals (OHA) received an Appeal that William H. Payne filed from a determination issued to him by the Director of the Office of Public Affairs at the Department of Energy’s (DOE) Albuquerque Operations Office (hereinafter referred to as “the Director”). The Director issued his determination in response to a request for information under the Freedom of Information Act (FOIA), 5 U.S.C § 552, as implemented by the DOE in 10 C.F.R. Part 1004. The Appeal, if granted, would result in the release of additional documents to Mr. Payne.

The FOIA generally requires that documents held by the federal government be released to the public upon request. However, Congress has provided nine exemptions to the FOIA which set forth the types of information agencies are not required to release. Under the DOE’s regulations, a document which is exempted from disclosure under the FOIA shall nonetheless be released to the public whenever the DOE determines that disclosure is not contrary to federal law and is in the public interest. 10 C.F.R. § 1004.1.

I. Background

In his request, Mr. Payne sought access to all invoices submitted to Sandia National Laboratories (SNL) between August 1, 1995 and August 14, 1997 by (i) law firms defending SNL in legal actions filed by “A. Morales,” and (ii) any contractor for work done “involving the name of William H. Payne.” In his response to Mr. Payne’s request, the Director stated that 11 invoices had been identified as responsive to the request. The Director released the

invoices in redacted form, withholding portions of these documents under Exemptions 4, 5 and 6 of the FOIA, 5 U.S.C. § 552(b)(4), (b)(5) and (b)(6). The Director further stated that subsequent to January 1997, the DOE had not retained any legal invoicesconcerning the Morales law suits. Consequently, any invoices submitted after that date would be in the legal files of SNL, and are therefore not “agency records” that would be subject to release under the FOIA. The Director then said that pursuant to DOE “policy, records in the possession and control of a DOE ... contractor, such as [SNL], will be made available by DOE [under the FOIA] when the contract specifically provides that such records are the property of the government.” Determination letter at 1. The Director found that the contract between SNL and the DOE specifically provides that legal records such as those requested by Mr. Payne are the property of SNL, and are therefore not subject to release.

In his appeal, Mr. Payne does not contest the withholding under Exemptions 4, 5 and 6 of portions of the 11 invoices released to him. Instead, he contends that the post-January 1997 invoices are agency records that are subject to the FOIA. In this regard, he characterizes the DOE contractor records policy as one that “redesignat[es] a class of records from DOE-owned to contractor- owned,” thereby shielding those records from the FOIA. Appeal at 2. He further argues that the policy was not adopted in accordance with the notice and comment rulemaking requirements of the Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. (APA), and has therefore been declared invalid by the federal courts.(1)

II. Analysis

The appropriate test of whether a document is an agency record for purposes of the FOIA was set forth by the U.S. Supreme Court in Department of Justice vs. Tax Analysts, 492 U.S. 136, 144-45 (1989). In that decision, the Court stated that documents are “agency records” for FOIA purposes if they (1) were created or obtained by an agency, and (2) are under agency control at the time of the FOIA request. The FOIA defines the term “agency” to include any “executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch..., or any independent regulatory agency.” 5 U.S.C. § 552(f).

Under these criteria, the post-January 1997 invoices involving the Morales lawsuits clearly are not agency records. They were generated by private law firms defending SNL in the Morales litigation, and not by agencies of the federal government or government-controlled corporations. Moreover, there is no indication in the record that the invoices in question were under DOE control at the time of Mr. Payne’s request. The Director correctly concluded that these invoices are not agency records under the FOIA.

A finding that certain documents are not agency records, however, does not preclude the DOE from releasing them. “When a contract with DOE provides that any records acquired or generated by the contractor in its performance of the contract shall be the property of the Government, DOE will make available to the public such records that are in the possession of the Government or the contractor,” unless those records are otherwise exempt from public disclosure. 10 C.F.R. § 1004.3(e)(1). Accordingly, we have examined the contract between SNL and the DOE, and we conclude that under that agreement, SNL’s legal files are the property of SNL, and are not subject to release under either the FOIA or the agency records regulation. Accord, William H. Payne, 26 DOE ¶ 80,161 at 80,700 (1997).

Mr. Payne contends, however, that the DOE’s contractor records policy narrows information access rights under the FOIA “by redesignating a class of records from DOE-owned to contractor- owned.” He also contends that this policy is invalid because it was not adopted in accordance with the notice and comment rulemaking requirements of the APA.

We believe that these arguments reflect a misunderstanding of the effect and origin of 10 C.F.R. § 1004.3(e)(1). Contrary to Mr. Payne’s assertions, this regulatory provision expands the scope of documents that are subject to disclosure. Under the Tax Analysts test, “agency records” must (i) have been originated or obtained by an agency, and (ii) be under an agency’s control at the time of the FOIA request. However, pursuant to 10 C.F.R. § 1004.3(e)(1), contractor records that do not meet these criteria are still subject to disclosure as long as the contract between the contractor and the DOE provides that the records are government property. Moreover, 10 C.F.R. § 1004.3(e)(1) was adopted in full compliance with the notice and comment requirements of the APA. On October 23, 1991, the DOE published this provision in proposed form. See 56 Fed. Reg. 55036. After receiving and considering 43 comments on the proposed regulation, the DOE adopted 10 C.F.R. § 1004.3(e)(1) in final form. See 59 Fed. Reg. 63882 (December 12, 1994). We therefore reject Mr. Payne’s arguments concerning the Director’s application of that regulation.

III. Conclusion

The Director correctly determined that the post-1997 Morales invoices are not agency records, and are not subject to disclosure under the FOIA or under 10 C.F.R. § 1004.3(e)(1). We will therefore deny Mr. Payne’s appeal.

It Is Therefore Ordered That:

(1) The Appeal filed by William H. Payne on March 13, 1998 is hereby denied.

(2) This is a final Order of the Department of Energy from which any aggrieved party may seek judicial review pursuant to 5 U.S.C. § 552(a)(4)(B). Judicial review may be sought in the district in which the requester resides or has a principal place of business, or in which the agency records are located, or in the District of Columbia.

George B. Breznay

Director

Office of Hearings and Appeals

Date: April 10, 1998

(1)Mr. Payne does not provide a citation for any case in which a federal court has declared the DOE’s current contractor records policy to be invalid. However, in Committee to Bridge the Gap v. Department of Energy, Docket No. CV-90-3568-ER (C.D. Cal. October 15, 1991), the court found that the DOE’s policy on contractor records constitutes a substantive rule under the APA, and that the DOE’s treatment of contractor records should be promulgated through formal notice and comment rulemaking. Subsequent to this ruling, the DOE codified its contractor records policy at 10 C.F.R. § 1004.3(e)(1), a regulatory provision that, as we discuss later, was adopted in accordance with the notice and comment requirements of the APA.